Guests take a tour at the “Cyber Rodeo” grand opening celebration for the new $1.1 billion Tesla Giga Texas manufacturing facility in Austin in April. State leaders are glad to welcome the company but makes it hard to buy Tesla cars in Texas. (Jay Janner /Austin American-Statesman via AP)

Texas Isn’t Abiding by Free Market Principles on Alcohol, Teslas

OPINION AND COMMENT

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Guests attend the “Cyber ​​Rodeo” grand opening ceremony for the new $1.1 billion Tesla Giga Texas manufacturing plant in Austin in April.  State leaders are happy to welcome the company, but buying Tesla cars in Texas is difficult.  (Jay Janner/American Statesman from Austin via AP)

Guests attend the “Cyber ​​Rodeo” grand opening ceremony for the new $1.1 billion Tesla Giga Texas manufacturing plant in Austin in April. State leaders are happy to welcome the company, but buying Tesla cars in Texas is difficult. (Jay Janner/American Statesman from Austin via AP)

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Compared to many states, Texas has relatively sound economic policies. Taxes are quite low, labor is at-will and therefore mostly paid at market rates rather than union or government mandated levels.

It’s less complicated to start a new business or build a new building here than in many states, and so it’s easier to create new jobs. And while Texas is blessed with an abundance of natural resources, we have also diversified our economy over the past few decades to be reasonably insulated from fluctuating oil and gas prices.

But while Texans, or at least conservative Texans, like to think of Texas as a state that exemplifies a philosophy of free markets and limited government, I have bad news for you.

There are several areas where elected Republicans in Texas have confused being pro-market with being pro-business, and so they have enacted policies designed to protect incumbent businesses or traditional business models from disruptive competition, which would not not only better for consumers, but also would encourage higher economic growth and job creation in our state.

When you say you believe in free markets, that means you believe in robust competition – new competitors within the state, competition from outside, disruptive new technologies, and experimentation with new business models.

But when you enact policies designed to protect powerful business interests, you are protectionist and not liberal.

Texas’ tedious and unnecessary laws governing the sale and distribution of alcohol is an area where your elected Republican lawmakers repeatedly leave in place outdated regulations that protect a small number of private, family-owned liquor chains from competition. big box stores.

A particularly infuriating example is a new measure passed by Republicans in 2019. It barred companies outside of Texas from bidding on new electric transmission projects. My fellow Republicans, who claim to believe in free markets, have overwhelmingly passed legislation to protect a small number of huge transmission companies in Texas from new competition from out of state.

With fewer companies bidding on transmission projects, that just means those projects will cost more, and when you have a small number of companies legally allowed to bid, that introduces the possibility of collusion. It’s bad for Texas taxpayers, but good for the public services lawmakers have chosen to protect. In other words, the legislators made a pro-business choice, but certainly not a pro-market one.

However, perhaps the most immediate and compelling example is how Texas Republicans are using the power of the law to force Texas consumers to buy vehicles through the traditional car dealership model. Residents of 31 other states can buy vehicles directly from manufacturers such as Tesla and Rivian, but not Texans.

For Texas Republicans-elect, protecting auto dealerships from low levels of disruptive competition is more important than upholding their free-market principles and allowing Texas consumers to take advantage of new business models. They are happy to recruit Elon Musk’s company from outside of California, although it is still difficult to buy the cars built here.

Some Republicans in Texas may think that to support fossil fuels they must necessarily oppose electric vehicles, but that’s ridiculous. The electricity that charges electric vehicles doesn’t come out of nowhere — it’s generated by our natural gas power plants here in Texas.

In all of these cases, Republican lawmakers in Texas have chosen campaign dollars from big contributors over fidelity to their stated free-market principles. They chose to favor businesses over consumers.

Being a conservative lawmaker in Texas shouldn’t be about more guns and fewer abortions. We can open our state to even more economic growth, job creation, consumer choice, and overall economic freedom. But it will require elected Republicans to live up to the rhetoric of their campaign mailings and adopt policies that actually expand markets rather than protect well-connected business interests.

Tom Giovanetti is president of the Institute for Policy Innovation, a free-market think tank in Dallas.

Tom Giovanetti mug.jpg
Tom Giovanetti is president of the Institute for Policy Innovation, a public policy research organization based in Irving.

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